Why a Coming Gap in the Supply of Oil Is Unlikely

Is the oil exploration & production spending supply hole real and will it result in a production gap in a couple of years?

The oil industry and its analysts have begun to focus on how capital spending has declined so much recently that we could find that we do not have enough oil within a couple of years to meet demand. This “supply hole thesis” has been used by Saudi to justify a production cut in order to signal producers to allocate more money into the sector and it has been what has been used by stuggling producers to hang on in the hope that the supply hole will drive prices back up to get them back to financial health.